The news comes after weeks of speculation as to where last season's Sixth Man of the Year would land. In June, he announced that he would opt out of the final year of his contract with New York and test the free agent market. The Milwaukee Bucks had reportedly shown interest in the 27-year-old guard, but it appears now that he will remain with the Knicks for the next four seasons. In May, Smith had said he wants to "retire a Knick."

The deal, which will pay approximately $6 million per season, is more than twice the $2.8 million Smith made in salary last year with the Knicks. The deal he agreed to on Thursday is the most the Knicks can offer under the Early-Bird rights because Smith played only two seasons with the Knicks. According to terms of the Early Bird rights, a team can re-sign a player that enters free agency for 175 percent of his annual salary the previous season or for the average NBA salary, whichever is greater. Our own Ben Eagle gave the deal a "B," citing an impressive regular season for Smith even though the deal now slightly hurts the Knicks' cap flexibility in 2015 when the contracts expire for Carmelo Anthony, Tyson Chandler and Ama're Stoudemire.

Smith averaged 18.1 points and 5.3 rebounds per game last season, both career highs. But despite his initial contributions, his performances declined dramatically in the playoffs. After shooting 42 percent from the field this year, Smith struggled throughout the postseason, shooting 33 percent over 11 games, including three sub-30 percent outings during the Knicks’ second round loss to the Indiana Pacers.

According to the Post report, Smith's agent said he was looking for an offer of $10 million per season and would have left the Knicks if he had received a three-year deal for $30 million or a four-year deal for $36 million. Smith's father told The Post Wednesday night that his son is not signing yet.

The Houston Rockets were considering a four-year deal for the Knicks guard, and the Dallas Mavericks also showed interest but they will both wait to see where Dwight Howard signs first before reaching out to Smith. Howard, a free agent with the Los Angeles Lakers, is currently in the mountains contemplating his decision after hosting meetings in Los Angeles this week with the Rockets, Mavericks, Lakers and Atlanta Hawks and is expected to make his decision in the next couple of days.